Lawyer’s added view – Bank Joint Account in Malaysia

Dear All, this is true and it has been confirmed with a lawyer……..
Good article !!! I received it from my friend about the Bank Joint Account in Malaysia.

“Just to share with you one recent article I read and shocked me a lot..

It happened in west Malaysia , about a husband and wife and one son. The husband passed away due to accident. The husband had a RM50,000 joint saving account with wife in a local bank. What happened is the wife ,like most people think, when husband passes away, she will get the money automatically since it is a joint account. But to her surprise, She could not withdraw even a single cent from the bank..

Joint saving account is meant for convenience when spouse needs it the most.. But most people always assume once the other holder dies, another half will get the money automatically which is very wrong.

I would like to share my opinion with all of you, you may take it as educational thoughts or for you to be aware.

When one person dies, the other joint holder of the saving account will get the money automatically only – if that particular bank practise ‘JOINT TENANCY’. This terms means one party die, the other joint party gets money automatically.

But unfortunately, not all banks practise JOINT TENANCY, some foreign banks practise but most local banks don’t practise.

If you want to be sure, just ask your bank whether your joint saving account based on JOINT TENANCY. If Yes, get the black and white.

Can you all imagine, when the other half passes away, the other half already suffers emotional loss. Now he/she will have to suffer another problem of having ‘NO MONEY’, although having money in a bank on a joint account.

Because of ignorance on the ‘terms and conditions’, the wife and the son have to suffer.

Hope the above can help for you. Just take note. ”

In response to the above email, a senior lawyer, Mr Tong Soo Tim, had kindly shared his view as stated below:

“I have read it and find that it represents an unbalanced view of the situation and it causes me concern.

This is my addition to the partial information in the article.

In theory there is such thing as Joint Tenancy versus Tenancy in Common. This is in English and Common Civil Law. If you actually ask most bank officers in Malaysia or even some lawyers in Malaysia, they wouldn’t be able to tell you what is Joint Tenancy or Tenancy in Common. This is because we don’t have exactly the same law as in England.

I know that some Malaysian banks have something called “Survivorship Clause“. This is more easily understood….to mean that if there is 2 or more names in a joint-account, the survivor (the one who didn’t die) gets to have all the money in the joint account.

I believe, though I have not checked with all the banks, that you can ask if they have this clause. It is a separate paper for both the account holders to sign when opening, or sometimes even after the account have been opened previously, in order to say that the account holders themselves, opt for this “Survivorship Clause”.

There are pro-and-con for Joint Tenancy and Tenancy in Common. While in the email below, it draws up a scenario where it may seem like a hardship for a wife (widow) not to have access to the bank accounts directly and immediately, but the fact is that, if the widow is to have all the money, sometimes there’s no guarantee the widow is actually the rightful person to have the money.

For example, 1. The deceased has parents, and children, besides the widow. The money should be shared between all of them. 2. The widow is only family…but they are separated, and pending divorce. The deceased may have done a Will to give his money to his brothers or sisters instead of his separated wife.

The freezing of account may be frustrating and problematic in some genuine cases…but to just allow widows or widowers to take out money from their joint-accounts may cause injustice in some cases.

Another scenario could be in the case of Joint accounts between a old parent and one of his 4 or 5 children. If the joint-account holder is allowed to just take out the money, it may be a temptation for the child not to honor his old parent’s instructions to share the money with all the children. This is actually a Breach of Trust. But if the money is already taken out, and there is a blanket policy of “Joint Tenancy”, then the other children have absolutely no cause in law to challenge the “joint-account holder child”.

Hope this helps to balance the article’s point a bit. Emotional approach is appealing, but it is sometimes not accurate nor even right. While we all wish for life to be more convenient, there are usually good reasons for legal processes…the law and lawyers are not here just to make life difficult ;-)”

12 responses so far ↓

I would like to asked if in a case if the husband is declared bankrupt, will the wife entitle to half of the savings in the Joint Account since it is a joint account and the other half should entitle to get her share as the wife is not a bankrupt. Please advise. Thanks.

” This is actually a Breach of Trust. But if the money is already taken out, and there is a blanket policy of “Joint Tenancy”, then the other children have absolutely no cause in law to challenge the “joint-account holder child”. ”

What if prior to the signing the document containing the survivorship clause, the old parent made sure that 1 of the 5 siblings knew that the only reason why the old parent is signing that document is because the old parent intend the 1 sibling who is also the Joint AC holder to hold the money on trust after she dies for the benefit of all 5 of them. Will this make a difference to your answer? Does the other 4 siblings retain their cause of action for breach of trust despite the survivorship clause?

As I understand it, local banks are not permitted to offer the Survivorship Clause to joint account holders – the accounts can only be Tenancy in Common. I suspect this may be related to Faraid inheritance laws.

If you want to ensure that your spouse or other family member is able to access the funds, maintain an account with a foreign bank – HSBC, Citibank, StanChart, UOB etc and make sure the Survivorship Clause is enabled.

From what i understand from the survivorship clause, it is for the convenient and benefit of the banks. If a person passes away, the bank will automatically allow the survivor in the joint account to take out the money. But in my opinion, the issue as to the rightful beneficiary of the money, it has to be determined by will or court or law(faraid or distribution act).

The Law and Practice of Banking by J. Milnes Holden, Vol. 1, Fourth Edition, page 387:

“11-86 In the vast majority of cases a bank will obtain a good discharge by paying the balance of a joint account to the survivor or survivors, either because of the express terms of a survivorship clause or because of the right of survivorship which arises when money is deposited in joint names. It does not follow, however, that the survivor or survivors are beneficially entitled to the money standing to the credit of the account. Sometimes, the survivor or survivors will hold the balance in trust for the personal representatives of the party who died first; sometimes the survivor or survivors will be beneficially entitled to the whole of the balance; and in other cases, the balance may have to be apportioned. Fortunately, the bank is not usually concerned with these problems which, in default of agreement, may have to be resolved by the courts.”

Eunice, unlike Islamic inheritance law, the western model that we adopt leaves it to the original owner of the estate to decide who inherits. While parents, spouse and issue can contest a will that excludes them, they are natural beneficiaries only in the absence of a will or other legally binding arrangement by the benefactor.

If the persons operating a joint account understand that it is a JOINT TENANCY, it is implicitly understood that the surviving person is the sole beneficiary of that account. No one else has any claim on it.

Local banks are not allowed to offer JOINT TENANCY because it runs contrary to Faraid. Non-Muslims are not bound by this and can operate such accounts with foreign banks.

Further, is it mean that the JOINT TENANCY will prevail against the grant of probate? So in the event that we have served the grant of probate to the foreign bank where the deceased has a joint account, the survivor will still be the sole beneficiary of the said joint account?

My understanding is that at the time the grant of probate is served, whatever remains in the Joint Tenancy account will be considered part of the Estate, to be distributed according to the Will. If there is no Will, a Letter of Administration will have to be obtained and whatever is deemed to be a part of the estate will be distributed according to the provisions of the Distribution Act.

In that respect, the Joint Tenancy does not offer the protection of a Trust which is not governed by the Distribution Act. But it offers immediate legal access to funds. This is why it is good for non-Muslim partners to maintain a joint account with a foreign bank.

For Muslims, it is not illegal according to Civil Law to operate a Joint Tenancy account. They have to address any conflict with Syariah according to their own conscience.

In my opinion, since the joint-account is opened with consent of both parties, it also means that whatever money in the joint-account is agreeably, shared by both party. The bank should caustion the account holders instead of keeping them unaware about the consequence in case one of them departed earlier than the other.

Our banking system is stone aged. No wonder we are still not a first world. Our banking rules, property transaction rules are all cumbersome and complicated to the point no one is secure except the lawyers just make money out of all this complication.

I have a check on US banking rules and Australia banking rules. All joint accounts will be considered JOINT TENANCY. This make estate planning easier when one is still surviving.

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